Cargills Ceylon maintains revenues during pandemic-stricken June quarter

Cargills (Ceylon) PLC maintained its revenues during the three months ended in June, largely unchanged from the previous three months, but significantly up from a year ago when the virus related lockdowns forced businesses to remain shuttered and people to remain indoors for a longer period when the pandemic first struck the country. 

Cargills reported sales of Rs.29.4 billion in the April - June quarter, compared to Rs.30 billion reported in the three months ended in March 2021, the company’s fourth fiscal quarter, reflecting that the country’s second largest retailer had largely weathered the restrictions re-imposed since mid-April with the re-emergence of the virus. 

The June quarter sales were also 29 percent higher than the corresponding quarter in 2020 when the company recorded Rs.22.8 billion when the nearly two months long lockdowns had a bearing on the company’s top-line.

Cargills’ retail arm comprising of over 450 stores island wide generated revenues of Rs.22.7 billion, nearly at the same level to its March quarter, but up significantly from Rs.17.4 billion a year ago.

The performance of the company is a reflection that the large retailers are now better prepared than a year ago to serve their customers through their e-commerce platforms, which have  largely enabled to offset the loss of sales from in-store sales caused as a result of the lower footfall during mobility restrictions.   Cargills in August 2020 invested in a new e-grocery store titled, ‘Cargills Online’, to better handle the growing online orders for grocery when more people chose to order their household staples from the convenience at home, a trend which gained momentum with the pandemic and its related mobility restrictions. 

In a further indication of the company’s physical retail strategy, Cargills recently indicated their desire to expand more of their convenience store style outlets which makes easier for the company to penetrate into the bigger grocery market with relatively less per store capital expenditure. 

Meanwhile the group’s food and beverage manufacturing and distribution segment which has an expansive dairy, frozen and other confectionary range reported revenues of Rs.5.8 billion, up 17 percent from a year ago period.  The group’s restaurant business with its KFC franchise and TGI Fridays’ franchise also doubled its revenues to Rs.928.4 million from a year ago period, which may have been possible mostly from deliveries and takeaways as there were restrictions on in-door dining during the latter part of the quarter. 

The company reported earnings of Rs.1.97 a share or Rs.508.2 million in the April - June quarter compared to 81 cents a share or Rs.209.7 million in the year earlier period.   Cargills Ceylon promoters, C T Holdings PLC held 69.88 percent stake in Cargills Ceylon, besides the individual holdings in the company by Page family members. The Employees Provident Fund held 3.26 percent stake being its third largest shareholder.